After Golden Week, Las Vegas Sands still the best long term Macau pick

After Super Golden Week optimism late last month, the mood has soured. Apparently, the record revenues that the casinos were expecting didn’t materialize. Every outlet seems to be reporting a different reason for this and the whole picture seems very confused. We have the Power Macau Gaming Association claiming that indeed, revenue was slightly higher than the previous year. On the other hand we have the tourism board reporting that Golden Week travel to Macau fell 2% compared to last year. While these two reports are not mutually contradictory, there’s a third that’s even more confusing. Stephen Lau, president of Power Macau Association, said that the problem wasn’t that the casinos weren’t crowded, but that the visitors did not necessarily gamble.

The mixed messages here reflect the unpredictable Macanese business atmosphere. Nobody knows what is going to happen even as it’s happening. As we’ve seen over the past 5 years especially, business is heavily dependent on the fickle moods of politicians in Beijing. Their behavior is as unpredictable as the actual numbers. They can relax their grip on Macau for months or even years at a time, but one day they can announce a new crackdown campaign on one thing or another.

One day a junket can fall and rock a casino or tw, and nobody knows when such a thing will happen and how much of a hole it would make. Trading these kinds of events can be fun for a while, but soon you’ll just get dizzy, confused and frustrated. Novice traders who began their stints with some luck tend to look at charts like Wynn’s and salivate, imagining they can buy at lows and sell at highs and be millionaires. Buying at $20 and selling at $240 can certainly do that, but there is almost nobody who actually did, and the handful that did were lucky. The number of people who sold at $20 and bought at $240 is substantially higher, because it takes no discipline to sell at bottoms and buy at highs. All it takes is emotion.

So let’s imagine that we are all normal, average investors, not traders. We’re not stupid enough to sell at bottoms or buy at tops, but not brave enough to buy at bottoms or sell at tops. So we buy somewhere in the middle and the stock goes up and down and we just keep it. Let’s say you bought WYNN at $120 or so back in 2013 and reinvested dividends. You’d be up about 20% on dividends and 22% on capital gains, for over a 40% gain. That’s pretty good for a 5 year investment, provided you can ignore all the noise and news of numbers coming out of every direction and Beijing slicking the trading floors with oil and roller coaster of Wynn price action itself.